Lazard Global Total Return and Income Fund Declares Monthly Distribution and Issues Estimated Sources of the Distribution Announced in November
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Insights
The announcement by Lazard Global Total Return and Income Fund, Inc. regarding its managed distribution policy reflects a commitment to provide shareholders with a predictable income stream. The 7.0% annualized distribution rate is significant, especially when considering the average annual total return of 8.96% for the past five years. This suggests that the fund has been able to generate returns above the distribution rate, which is a positive sign for investors seeking both income and capital appreciation.
However, the fact that 68% of the cumulative distributions for the year have come from return of capital could raise concerns about the sustainability of the distributions. While return of capital can boost yield, it may also indicate that the fund is not generating enough income from investments to cover the distributions and is instead returning investors' principal. This could potentially erode the fund's asset base over time if not balanced by capital gains or other income.
Investors should also note the annualized current distribution rate of 6.57% as of November 30, 2023, which is slightly below the 7% target. The cumulative total return of 13.28% for the fiscal year and the distributions as a percentage of NAV at 2.74% are critical metrics indicating the fund's performance relative to the distributions paid. These figures can help investors assess whether the fund's distribution is supported by its overall performance or if they are at risk of diminishing capital.
Investors should consider the tax implications of the distributions, particularly the composition of the current distribution. The majority of the distribution is categorized as net investment income, which is typically taxed at ordinary income rates. The smaller portion from net realized long-term capital gains is subject to lower tax rates. The absence of net realized short-term capital gains is favorable, as these would be taxed at higher ordinary income rates.
It is also important to highlight that distributions classified as return of capital are not immediately taxable. Instead, they reduce the cost basis of the investment and defer the tax liability until the stock is sold. While this can be a tax-efficient way to receive distributions, it is crucial for investors to adjust their cost basis to avoid complications when they decide to sell their shares.
Investors should be aware that the accounting methods used by the fund for these calculations may differ from federal income tax regulations. Therefore, they should consult with a tax advisor to understand the specific tax treatment of these distributions and to ensure compliance with tax laws and regulations.
The ex-dividend date is a key consideration for investors, as it determines eligibility for the current distribution. Those who own shares before the ex-dividend date are entitled to the distribution. This timing can influence investment decisions and stock price movements, as some investors may seek to acquire shares in anticipation of the distribution.
The fund's performance metrics such as the average annual total return and the cumulative total return are essential for evaluating the fund's historical success in achieving its investment objectives. However, past performance is not indicative of future results and investors should consider the fund's strategy, portfolio holdings and market conditions when assessing the likelihood of continued success.
Given the competitive landscape of income-generating investment products, the fund's distribution policy and performance should be compared with similar investment options. Diversification, risk tolerance and investment horizon are also crucial factors for investors to consider in relation to their overall portfolio strategy.
The Fund will pay a previously declared distribution today, December 22, 2023. The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid for the year to date, prior to today’s distribution, from the following sources: net investment income, net realized capital gains (short-term and long-term), and return of capital. All amounts are expressed per share of common stock and are based on accounting principles generally accepted in the US, which may differ from federal income tax regulations.
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Current Distribution |
% of the Current
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Total Cumulative
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% of the Total Cumulative
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Net Income |
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Net Realized Short-Term Capital Gains |
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Net Realized Long-Term Capital Gains |
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Return of Capital |
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Total |
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Average annual total return (in relation to NAV) for the 5-year period ending on November 30, 2023 |
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Annualized current distribution rate expressed as a percentage of NAV as of November 30, 2023 |
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Cumulative total return (in relation to NAV) for the fiscal year through November 30, 2023 |
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Cumulative fiscal year distributions as a percentage of NAV as of November 30, 2023 |
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You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's Managed Distribution Policy.
The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of your distribution may be return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income".
The amounts and sources of distributions reported above are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund provides financial intermediary firms the information necessary to produce the Form 1099-DIV, and then the relevant financial intermediary firm will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. If you have any questions, or need additional information, please call us at 1-800-823-6300.
Portfolio data as of November 30, 2023, including performance, asset allocation, top 10 holdings, sector weightings, regional exposure, and other Fund characteristics have been posted on Lazard Asset Management's ("LAM") website, www.LazardAssetManagement.com.
The Fund's investment objective is total return, consisting of capital appreciation and current income. The Fund's net assets are invested in a portfolio of approximately 60 to 80 US and non-US equity securities, including American Depository Receipts, generally of companies with market capitalizations greater than
An indirect subsidiary of Lazard Ltd (NYSE: LAZ), LAM, the Fund's investment manager, offers a range of equity, fixed-income, and alternative investment products worldwide. As of November 30, 2023, LAM and affiliated asset management companies in the Lazard Group managed
View source version on businesswire.com: https://www.businesswire.com/news/home/20231222451336/en/
Media contact:
Zoe Butt, +44 20 7448 2802
zoe.butt@lazard.com
Investor contact:
Ben Wulfsohn, +1 800 823 6300
ben.wulfsohn@lazard.com
Source: Lazard Global Total Return and Income Fund, Inc.
FAQ
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